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A radical alternative: an interview with John McDonnell

Image credit: The Mirror
Image credit: The Mirror
Image credit: The Mirror

Across the world, the consensus on how an economy should be run is unravelling. The enthusiasm for minimal government involvement, low regulation and globalisation is waning; rising levels of inequality, the decline of industry and traditional working jobs, and lower real wages prompt many people, including economists, to lose faith in the established school of economic thought.

Here in the UK, at the October 2016 Conservative Party conference, the Prime Minister terrified leading institutions with the promise that her government would intervene more in the state of the economy.

“We call on the Prime Minister to abandon her ideological attachment to interventionist economic policies, look at the evidence, and accept that it tells us that markets, not the state, are the solution to our problems,” wrote Sam Bowman, the Executive Director of the Adam Smith Institute.

“This was an alarming attack on free markets,” added the Director General of the Institute for Economic Affairs, Mark Littlewood, “and the Prime Minster’s pledge for more state intervention in business completely disregards the evidence that competition, deregulation and a light-touch approach breeds the best results.”

Some say that a change is in the air. “When your opponents start using your language and start advocating some of your policies, you know you’ve won,” John McDonnell tells me in the reception of the Royal York Hotel. He echoes an article he composed for the New Statesman last month. “The nature of that article was to pose the question, is neoliberalism in crisis?, which I think it is. We’re about to hegemonise the debate.”

We’re speaking an hour before the Shadow Chancellor delivers a talk on a new perspective on the future of economics. John McDonnell is touring the country, promoting a new economic school of thought that is clear contrast to what has come before. From January, the Labour Party will hold a series of regional conferences as well as an annual conference on the state of the economy, attended by economists, economic advisors to the party, trade unionists and other representatives. The intention, says McDonnell, is to “raise the level of economic debate” on the nation’s finances and economic inequality in the country and “create a climate that will feed into our policymaking.” The demand is high, with many events sold out.

The Labour Party has tried to turn attention to tax evasion and tax avoidance, and the search for a fairer tax system, but to no avail. “Sometimes it’s felt like beating your head against a brick wall.” But now that the leading Conservatives are finally addressing these themes, the conclusion should be obvious to all. “Trickle-down economics has demonstrably failed, whether it’s on its own metrics, or on our metrics on the nature of society itself,” says McDonnell. The last few decades of the neoclassical mentality, promoting in low taxation and little government intervention, private enterprise and deregulation of the markets, has resulted in widening gaps between the richest and the poorest in society. The Labour Party intends to present an alternative economic vision. “It’s about ensuring that you have a radically fairer, radically more equal, radically more democratic economy.”

McDonnell would shortly join Professor Kate Pickett and Emeritus Professor Richard Wilkinson, authors of the famous book The Spirit Level, to explore the alternative system. Wilkinson’s work on inequality, argues McDonnell, has been much maligned and received a very bad press at the time of his writing. “If you look at some of the media representations of his work, it was really distorted and he was attacked by Conservatives and others.” But now, “even in the Tory government, they’re trying to address these issues. They’ve realised that inequality within society is not only unsustainable socially and morally, it’s actually unsustainable economically as well.”

Earlier this week, a United Nations investigation declared that the Conservative government’s cuts on disabled citizens’ benefits had violated their rights. “I was involved in the UN report,” says McDonnell. “When the UN commissioned the report and sent the commissioner over, the Conservatives attacked it.” Working with organisations fighting for the rights of disabled people, McDonnell ensured that the evidence sought was submitted. “We now know there’s over 500 suicides associated with the sanctions.” Between 2011 to 2014, over 2000 people have died after being declared fit for work by government-backed agencies. “The scale of human suffering is appalling.”

But it was at the Conservative conference that Theresa May promised a more interventionist attitude on behalf of the government, breaking away from George Osborne’s approach. Though the Conservatives aren’t quite converting to socialism just yet, won’t they take the credit for the idea that Labour is investigating? “They’ll try to, but it will be shallow,” McDonnell insists. “It will be relatively ineffective and at the end of the day, people will see that and become even more disillusioned with the Conservatives.”

John McDonnell, Jeremy Corbyn and Tom Watson. Image credit: the New Statesman
John McDonnell, Jeremy Corbyn and Tom Watson. Image credit: the New Statesman

What McDonnell fears, however, is that people will become disillusioned with politics entirely. Now is Labour’s moment to develop a new narrative, he says, in contrast to the faltering story of neoliberalism, that wins people over and, with luck, ticks for Labour on the ballot box.

Ordinary people recognise the inequality that many face as well; but many voters see immigration and foreign workers to blame, or vote for parties that want to threaten the establishment that has let the public down. UKIP is drawing in voters from Labour and Conservative backgrounds. “UKIP poses itself as the insurgent party and does what most right-wing reactionary political parties do and chooses a scapegoat to blame for all the ills.” For McDonnell, the real insurgent party should be his own. Many Labour voters sought for Britain to leave the European Union; the party will recognise their concerns. Labour will approach immigration “head-on.” Free movement of people under a Labour government, McDonnell tells me, will “achieve the benefits but at the same time overcome the problems” of undercut wages and pressure on public services.

The Conservatives also promote themselves as the genuine party for working people. “Well, we all like a good joke now and again, don’t we?” sighs McDonnell. Another Conservative claim is that the Labour Party and its governance of the country caused the economic crash of the late 2000s, justifying the austerity policies implement by the 2010 – 2015 Coalition government. It’s an oft-repeated assertion that many have noticed coming out of Conservative MPs’ mouths; it’s also hugely inaccurate.

Nonetheless, many people still think it’s true and it’s done a huge amount of damage to the Labour Party’s credibility. “It’s because, one, we never had an alternative narrative to challenge them effectively, but also, there was a grain of truth in it as well,” McDonnell admits. “If you go along with a deregulated economy, as parts of New Labour did, and you allow the economy to become a speculator’s casino economy, as parts of New Labour did, then you become implicated in the crash when it comes – particularly if you’ve told everyone you’ve solved boom and bust.” There were “grains of truth in it,” says McDonnell, “but not this ludicrous thing that it was overspending, or the deficit caused the crisis – actually, the crisis caused the deficit – but we were implicated.”

Labour’s mission now is to overcome these implications. I didn’t expect McDonnell’s inspiration to be last year’s Conservative manifesto. Whereas Labour’s referred to the past and present, he tells me, the Conservatives’ looked to the future. “What we’ve got to do is reclaim the future for us. Increasingly, now, people see Theresa May in particular as someone reflected in the past.”

May’s pursuit of a return of grammar school education was ridiculed as a throwback to the 1950s; but the former Labour Prime Minister Tony Blair has described Labour’s current policies as stuck in the 1960s. “Well, the music was pretty good, I have to say,” the Shadow Chancellor jokes, “but actually, what we’re talking about is the next generation coming on, the future: how do you invest in the future? How do you create the policies that bring on the future?”

McDonnell looks to the future with optimism. Take a look at the Shadow Cabinet and you see “absolute stars”: Rachael Maskell (York Central), Rebecca Long-Bailey (MP for Salford and Eccles), Richard Burgon (Leeds East), Angela Rayner (Ashton-under-Lyne), “all people with life experience outside of parliament, but at the same time extremely talented.”

The awareness of inequality in the country is growing. Many researchers have monitored it for years, but until now their conclusions have been brushed aside. So what happens to free market economics now? It will linger, McDonnell believes. “It will reinvent itself in some form, it will always be there.” McDonnell reminds me that after decades of consensus on the post-war economy, in which the NHS and education were accepted by both parties, capitalism fought back in the 1980s when Thatcher came along. “It will always be there, there will always be a challenge. It will keep us on our toes, to keep on developing the narrative, developing the policies, and making sure they’re relevant to the future.”

Since the ascension of Jeremy Corbyn, the party membership has experienced something of a reawakening. 183,000 people wished to participate in the 2016 leadership contest alone. In July this year, half a million people were affiliated with the party. With over 600,000 members, the Labour Party is now the largest socialist party in Europe, to the envy of several left-wing political organisations on the continent. “What that gives us is a range of life experiences and expertises coming into the party that can demonstrate how the policies can be implemented.” Labour now looks to new ways of interacting with members, including digital democracy.

McDonnell’s vision is certainly exciting. “Politically, it’s probably the most exciting period in the Labour Party’s history for a long time, but also, I think, for the country’s history.” However, the new approach still has a long way to go. Whether in a small or large does, austerity is still seen as the solution to the financial crash of the late 2000s. The free market think tanks might be outraged at Theresa May’s interventionism, but her party is still a haven for free marketeers who are unlikely to have a change of heart. Other people do feel abandoned by capitalism, but they turn to figures like Donald Trump for radical change, someone whose ideas are wildly out of kilter with the Labour Party.

All in all, the consensus on the ‘dismal science’ is in trouble, but how will it evolve? We should keep a close eye on the what is to come.